NPH Neuropharm

or to secure a partner in order to continue development of the programmes. 
Immediately following the SOFIA result Neuropharm entered into discussions under 
a confidentiality agreement with a third party pharmaceutical company for a 
potential collaboration for the further development of NPL-2008. Advanced 
discussions continued for some months, during which time the design of a second 
Phase III trial to mitigate the placebo effect was completed. The cost to 
conduct and complete a second Phase III trial and potentially allow the 
completion of the Rolling NDA was estimated by the Company at around GBP5 
million. 
Following the announcement of the SOFIA result and then the Company's 
preliminary results in October 2009, the Company was advised by its nominated 
adviser and broker, Piper Jaffray Ltd, that there was significant uncertainty 
surrounding Neuropharm's ability successfully to raise further finance on AIM to 
continue funding its main programmes, reflecting the prevailing financial 
environment and an unwillingness of some significant shareholders to provide 
support or further funding for the Company. 
Discussions continued with potential partners and, on 3 November 2009, we 
announced that we were seeking a sale or merger of the Company as this seemed to 
be the most likely route for maximising shareholder value and continuing the 
development of the pipeline of compounds. As a result, Neuropharm was deemed to 
be in an offer period for the purposes of the Takeover Code. 
Following the result of the SOFIA study in February 2009 the Company took steps 
to reduce the cash burn to preserve the cash resources by placing research and 
development expenditure on hold. The details below summarise the latest position 
of our most advanced programmes. The Company continues in discussions with 
potential partners for the further development of these programmes but these are 
at an early stage. 
 
PIPELINE UPDATE 
NPL-2008: Autistic Disorder 
On 18 February 2009 we announced that the SOFIA study had not met its primary 
endpoint of a statistical reduction in repetitive behaviours and that, compared 
with a previously successful Phase II trial, the results were both unexpected 
and disappointing.  Unlike other SSRIs in paediatric studies in Autistic 
Disorder, NPL-2008 was well tolerated by patients in the SOFIA study and no 
serious adverse events were reported.  NPL-2008 and placebo both conferred 
benefit in the SOFIA study, with both treatments reducing repetitive behaviours 
in patients, according to pre-determined response criterion. In the SOFIA study 
the placebo effect was markedly higher than in the Phase II study and, 
accordingly, no statistically significant difference was observed on the primary 
endpoint between the active and placebo treatment groups. 
Following a detailed analysis and review of the SOFIA data we have designed a 
further Phase III study to mitigate the placebo effect seen in SOFIA. The study 
would include the potential for use of different dosages of NPL-2008, but these 
would be within the FDA's existing approved dose range for fluoxetine for use in 
children and adolescents and incorporating the low starting dose approach with 
fluoxetine which continues to be endorsed by leading US and UK clinical experts. 
 
NPL-2005 & NPL-2009: Fragile X Syndrome 
We have previously reported significant progress in our two programmes in 
Fragile X Syndrome, a condition caused by a mutation in the X chromosome that 
affects approximately 1 in every 3,800 male children and approximately 1 in 
every 8,000 female children.  In Fragile X Syndrome the FMR1 gene on the 
affected part of the chromosome shuts down and is unable to produce a protein 
needed by the brain for normal brain functioning.  The condition, thought to be 
the most common cause of inherited intellectual disability, is the focus of 
considerable interest from medical, scientific and patient communities because 
the genetics and proteomics of the condition are fully understood, suggesting 
that successful treatment should be achievable. 
Neuropharm has Orphan Drug Designation from FDA's Office of Orphan Product 
Development for its two potentially complementary programmes in Fragile X, 
NPL-2005 and NPL-2009.  Positive Phase IIa results from both compounds were 
presented in July 2008. 
 
NPL-2003: Obsessive Compulsive Disorder 
NPL-2003 is an existing marketed product that the Company believes could be of 
benefit to children and some adults with Obsessive Compulsive Disorder (OCD). 
Patients with OCD display two principal features: repeated (obsessional) 
thoughts of a severely anxious nature and, in an attempt to reverse the 
obsessional anxieties, repeated ineffectual (compulsive) behaviour or thoughts, 
such as repeated hand-washing.  Depression, social phobia and substance abuse 
rates are higher in these patients than in the general population. 
There are a number of different types of OCD, some of which occur for the first 
time in adults and others that are characterised as having an onset in 
childhood. 
Two small, open-label Phase II studies of NPL-2003 have been carried out in the 
US through our collaborations with Columbia University, New York, and University 
Hospitals Case Medical Center at Case Western Reserve University School of 
Medicine, Cleveland. These studies were carried out in adolescent and adult 
patients and provided combined data suggesting that NPL-2003 demonstrates 
therapeutic benefit in patients whose OCD started in childhood, irrespective of 
their age during treatment. The Company has filed a patent application which is 
under examination and an initial report has been accepted for publication in a 
relevant medical journal. 
 
OUTLOOK 
Our measures to conserve cash have successfully resulted in the Company having 
GBP6.18 million of cash and cash equivalents at the period end. 
The Board is exploring a return of cash to shareholders through a Members' 
Voluntary Liquidation of the AIM quoted company, Neuropharm Group plc. Meanwhile 
discussions in connection with the sale or merger of the Company or its assets 
are on-going but early stage. 
In anticipation of either a sale of the Company or Neuropharm Limited or its 
programmes, or a Members' Voluntary Liquidation, the Board has also decided to 
give notice to all employees including the three Executive Directors. 
 
Graeme M. Hart 
                      Robert G. Mansfield 
Chairman 
                           Chief Executive Officer 
 
22 March 2010 
 
 
Financial Review 
 
 
The financial statements for the six months ended 31 December 2009 are presented 
in accordance with the Group's accounting policies based on International 
Financial Reporting Standards ("IFRS") as adopted by the European Union. 
Cash, cash equivalents and money market investments at 31 December 2009 totalled 
GBP6.18 million (30 June 2009: GBP7.04 million). 
Results of operations 
We report a loss after tax of GBP1.2 million for the six months ended 31 
December 2009 (31 December 2008: GBP3.5 million), which is to be set against 
reserves.  The Directors do not recommend the payment of a dividend (31 December 
2008: GBPnil). 
Our virtual model enables us to have a low fixed cost base and keep variable 
costs tightly controlled, with decisions regarding investment in our pipeline 
and development of our US organisation dependent on regular review by the 
Directors.  We ensured that the committed costs of our US organisation, and 
pre-launch marketing of NPL-2008, were kept to a minimum awaiting the result of 
the SOFIA study in February 2009.  Following the outcome of the SOFIA study, we 
acted promptly to implement a cost reduction programme.  During the six months 
ended 31 December 2009 research and development expenses were placed on hold and 
steps were taken to reduce further Neuropharm's overhead including making 
redundancies. 
This approach has given us increased control over our cash-burn which has been 
dramatically reduced and enabled us to preserve our cash balance. 
Research and development expenses 
Following result of the SOFIA study in February 2009, research and development 
expenses were placed on hold and the SOFIA and EMMA studies closed down in an 
orderly manner. 
Research and development expenses were GBP67,000 in the six months ended 31 
December 2009 (31 December 2008: GBP2.3 million), of which GBP17,000 was run-off 
clinical trials insurance and GBP25,000 regulatory work. 
Selling, marketing and distribution expenses 
Selling, marketing and distribution expenses consist primarily of consultancy 
fees for market research, brand identity and launch planning strategy invested 
in initial preparations for the pre-launch marketing of NPL-2008.  Following 
result of the SOFIA study these costs were closed down in an orderly manner. 
Selling, marketing and distribution expenses were GBPnil in the six months ended 
31 December 2009 (31 December 2008: GBP0.2 million). 
Other management and administration expenses 
Other management and administration expenses were GBP1.1 million (31 December 
2008: GBP1.6 million).  These consist primarily of remuneration for employees, 
rent, travel and expenses, professional fees, insurances, fees for Non-Executive 
Directors and costs associated with maintaining the quotation of the Company's 
securities on AIM. 
Share option expense 
A share option expense of GBP0.1 million has been charged for the six months 
ended 31 December 2009 (31 December 2008: GBP0.3 million). 
Impairment charge 
During the six months ended 31 December 2008 the Company impaired in full the 
value of the intangible asset and tooling, since there remained uncertainty 
regarding funding, the future of NPL-2008 and the Company. 
Investment income 
The Company invests its surplus funds in bank deposits and money market 
investments of up to one year, according to the terms of the Group's Treasury 
Policy.  In the six months ended 31 December 2009 interest receivable was 
GBP32,000 (31 December 2008: GBP0.3 million), in line with surplus funds being 
invested in term deposits of up to one month, the decline in the interest rates 

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